America's
Private Gulag

What is
the most profitable industry in America? Weapons, oil and computer technology
all offer high rates of return, but there is probably no sector of the
economy so abloom with money as the privately-run prison industry.

Consider
the growth of the Corrections Corporation of America, the industry leader
whose stock price has climbed from $8 a share in 1992 to about $30 today
and whose revenue rose by 81 percent in 1995 alone.

Investors
in Wackenhut Corrections Corp. have enjoyed an average return of 18 per
cent during the past five years and the company is rated by Forbes as
one of the top 200 small businesses in the country. At Esmor, another
big private prison contractor, revenues have soared from $4.6 million
in 1990 to more than $25 million in 1995.

Ten years
ago there were just five privately-run prisons in the country, housing
a population of 2,000. Today nearly a score of private firms run more
than 100 prisons with about 62,000 beds. That's still less than five per
cent of the total market but the industry is expanding fast, with the
number of private prison beds expected to grow to 360,000 during the next
decade.

The exhilaration
among leaders and observers of the private prison sector was cheerfully
summed up by the headline in USA Today: "Everybody's doing the jailhouse
stock." An equally upbeat mood imbued a conference on private prisons
held last December at the Four Seasons Resort in Dallas. The brochure
of the conference, organized by the World Research Group, a New York-based
investment firm, called the corporate takeover of correctional facilities
the "newest trend in the area of privatizing previously government-run
programs... While arrests and convictions are steadily on the rise, profits
are to be made, profits from crime. Get in on the ground floor of this
booming industry now!"

A hundred
years ago private prisons were a familiar feature of American life, with
disastrous consequences. Prisoners were farmed out as slave labor. They
were routinely beaten and abused, fed slop and kept in horribly overcrowded
cells. Conditions were so wretched that by the end of the nineteenth century
private prisons were outlawed in most states. During the past decade,
private prisons have made a comeback. Already 28 states have passed legislation
making it legal for private contractors to run correctional facilities
and many more states are expected to follow suit.

The reasons
for the rapid expansion include the post-1980s free-market ideological
fervor, large budget deficits for the federal and state governments and
the discovery and creation of vast new reserves of "raw materials", prisoners.
The rate for most serious crimes has been dropping or stagnant for the
past 15 years, but during the same period severe repeat offender provisions
and a racist "get-tough" policy on drugs have helped push the US prison
population up from 300,000 to about 1.5 million. This has produced a corresponding
boom in prison construction and costs, with the federal government's annual
expenditures in the area of $17 billion. In California, passage of the
infamous "three strikes" bill will result in the construction of an additional
20 prisons during the next few years.

The private
prison business is most entrenched at the state level but is expanding
into the federal prison system as well. Last year Attorney General Janet
Reno announced that five of seven new federal prisons being built will
be run by the private sector. Almost all of the prisons run by private
firms are low or medium security, but the companies are trying to break
into the high-security field. They have also begun taking charge of management
in INS detention centers, boot camps for juvenile offenders and substance
abuse programs.

Roughly half
of the industry is controlled by the Nashville-based Corrections Corporation
of America, which runs 46 penal institutions in 11 states. It took ten
years for the company to reach 10,000 beds; it is now growing by the same
number every year. CCA's chief competitor is Wackenhut, which was founded
in 1954 by George Wackenhut, a former FBI official. Over the years its
board and staff have included such veterans of the US national security
state as Frank Carlucci, Bobby Ray Inman and William Casey, as well as
Jorge Mas Canosa, leader of the fanatic Cuban American National Foundation.
The company also provides security services to private corporations. It
has provided strikebreakers at the Pittston mine strike in Kentucky, hired
unlicensed investigators to ferret out whistle blowers at Alyeska, the
company that controls the Alaskan oil pipeline, and beaten anti-nuclear
demonstrators at facilities it guards for the Department of Energy.

Wackenhut
has a third of the private prison market with 24 contracts, nine of which
were signed during the past two years. In a major coup, the company was
chosen to run a 2,200 capacity prison in Hobbs, New Mexico, which will
become the largest private prison in the US when it opens late this year.
Esmor, the No. 3 firm in the field, was founded only a few years ago and
already operates ten corrections or detention facilities. The company's
board includes William Barrett, a director of Frederick's of Hollywood,
and CEO James Slattery, whose previous experience was investing in and
managing hotels.

US companies
also have been expanding abroad. The big three have facilities in Australia,
England and Puerto Rico and are now looking at opportunities in Europe,
Canada, Brazil, Mexico and China. The companies that dominate the private
prison business claim that they offer the taxpayers a bargain because
they operate far more cheaply than do state firms. As one industry report
put it. "CEOs of privatized companies... are leaner and more motivated
than their public-sector counterparts." But even if privatization does
save money, and the evidence here is contradictory , there is, in the
words of Jenni Gainsborough of the ACLU's National Prison Project, "a
basic philosophical problem when you begin turning over administration
of prisons to people who have an interest in keeping people locked up."

To be
profitable, private prison firms must ensure that prisons are not only
built but also filled. Industry experts say a 90 to 95 per cent capacity
rate is needed to guarantee the hefty rates of return needed to lure investors.
Prudential Securities issued a wildly bullish report on CCA a few years
ago but cautioned, "It takes time to bring inmate population levels up
to where they cover costs. Low occupancy is a drag on profits." Still,
said the report, company earnings would be strong if CCA succeeded in
"ramp[ing] up population levels in its new facilities at an acceptable
rate." (PT's italics)

A 1993 report
from the State Department of Corrections in New Mexico found that CCA
prisons issued more disciplinary reports, with harsher sanctions imposed,
including the loss of time off for good behavior, than did those
run by the state. A prisoner at a CCA prison said, "State run facilities
are overcrowded and there's no incentive to keep inmates as long as possible...
CCA on the other hand reluctantly awards good time. They give it because
they have to but they take it every opportunity they get... Parole packets
are constantly getting lost or misfiled. Many of us are stuck here beyond
our release dates."

Private prison
companies have also begun to push, even if discreetly, for the type of
get-tough policies needed to ensure their continued growth. All the major
firms in the field have hired big-time lobbyists. When it was seeking
a contract to run a halfway house in New York City, Esmor hired a onetime
aide to state Rep. Edolphus Towns to lobby on its behalf. The aide succeeded
in winning the contract and also the vote of his former boss, who had
been an opponent of the project. In 1995, Wackenhut Chairman Tim Cole
testified before the Senate Judiciary Committee to urge support for amendments
to the Violent Crime Control Act, which subsequently passed, that
authorized the expenditure of $10 billion to construct and repair state
prisons.

CCA has been
especially adept at expansion via political payoffs. The first prison
the company managed was the Silverdale Workhouse in Hamilton County, Tennessee.
After Commissioner Bob Long voted to accept CCA's bid for the project,
the company awarded Long's pest control firm a lucrative contract. When
Long decided the time was right to quit public life, CCA hired him to
lobby on its behalf. CCA has been a major financial supporter of Lamar
Alexander, the former Tennessee governor and failed presidential candidate.
In one of a number of sweetheart deals, Lamar's wife, Honey Alexander,
made more than $130,000 on a $5,000 investment in CCA. Tennessee Governor
Ned McWherter is another CCA stockholder and is quoted in the company's
1995 annual report as saying that "the federal government would be well
served to privatize all of their corrections."

The prison
industry has also made generous use of the junket as a public relations
technique. Wackenhut recently flew a New York-based reporter from Switzerland,
where the company is fishing for business, to Florida for a tour
of one of its prisons. The reporter was driven around by limousine, had
all her expenses covered and was otherwise treated royally. In another
ominous development, the revolving door between the public and private
sector has led to the type of company boards that are typical of those
found in the military-industrial complex. CCA co-founders were T. Don
Hutto, an ex-corrections commissioner in Virginia, and Tom Beasley, a
former Chairman of the Tennessee Republican Party. A top company official
is Michael Quinlan, once director of the Federal Bureau of Prisons. The
board of Wackenhut is graced by a former Marine Corps commander, two retired
Air Force generals and a former under secretary to the Air Force, as well
as by James Thompson, ex-governor of Illinois, Stuart Gerson, a former
assistant US attorney general and Richard Staley, who previously worked
with the INS.

Because they
are private firms that answer to shareholders, prison companies have been
predictably vigorous in seeking ways to cut costs. In 1985, a private
firm tried to site a prison on a toxic waste dump in Pennsylvania, which
it had bought at the bargain rate of $1. Fortunately, that plan was rejected.
Many states pay private contractors a per diem rate, as low as $31 a prisoner
in Texas. A federal investigation traced a 1994 riot at an Esmor immigration
detention center to the company's having skimped on food, building repairs
and guard salaries. At an Esmor-run halfway house in Manhattan, inspectors
turned up leaky plumbing, exposed electrical wires, vermin and inadequate
food.

To ratchet
up profit margins, companies have cut corners on drug rehabilitation,
counseling and literacy programs. In 1995, Wackenhut was investigated
for diverting $700,000 intended for drug treatment programs at a Texas
prison. In Florida the US Corrections Corporation was found to be in violation
of a provision in its state contract that requires prisoners to be placed
in meaningful work or educational assignments. The company had assigned
235 prisoners to be dorm orderlies when no more than 48 were needed and
enrollment in education programs was well below what the contract called
for. Such incidents led a prisoner at a CCA facility in Tennessee to conclude,
"There is something inherently sinister about making money from the incarceration
of prisoners, and in putting CCA's bottom line (money) before society's
bottom line (rehabilitation)."

The companies
try to cut costs by offering less training and pay to staff. Almost all
workers at state prisons get union-scale pay but salaries for private
prison guards range from about $7 to $10 per hour. Of course the companies
are anti-union. When workers attempted to organize at Tennessee's South
Central prison, CCA sent officials down from Nashville to quash the effort.
Poor pay and work conditions have led to huge turnover rates at private
prisons. A report by the Florida auditor's office found that turnover
at the Gadsden Correctional Facility for women, run by the US Corrections
Corporation, was 200 per cent, ten times the rate at state prisons. Minutes
from an administrative meeting at a CCA prison in Tennessee have the "chief"
recorded as saying, "We all know that we have lots of new staff and are
constantly in the training mode... Many employees [are] totally lost and
had never worked in corrections."

Private companies
also try to nickel and dime prisoners in the effort to boost revenue.
A prisoner at a Florida prison run by CCA has sued the company for charging
a $2.50 fee per phone call and 50 cents per minute thereafter. The lawsuit
also charges that it can take a prisoner more than a month to see a doctor.
A number of prisoners complain about exorbitant prices. "Canteen prices
are outrageous," wrote a prisoner at the Gadsden facility in Florida.
"[We] pay more for a pack of cigarettes than in the free world." Neither
do private firms provide prisoners with soap, toothpaste, tooth brushes
or writing paper. One female prisoner at a CCA prison in New Mexico said:
"The state gives five free postage paid envelopes per month to prisoners,
nothing at CCA. State provides new coats, jeans, shirts, underwear and
replaces them as needed. CCA rarely buys new clothing and inmates are
often issued tattered and stained clothing. Same goes for linens. Also
ration toilet paper and paper towels. If you run out, too bad, 3 rolls
every two weeks."

General conditions
at private prisons appear in some respects to be somewhat better than
those found at state institutions, a fact possibly linked to the negative
business impact that a prison disturbance can cause private firms. For
example, the share price of stock in Esmor plunged from $20 to $7 after
a 1994 revolt at the company's detention center for immigrants in Elizabeth,
New Jersey. Nevertheless a number of serious problems at prisons run by
private interests still exist. Back in the mid-1980s, a visiting group
of professional guards from England toured the CCA's 360-bed state prison
in Chattanooga, Tennessee, and reported that inmates were "cruelly treated"
and "problem" prisoners had been gagged with sticky tape. The warden regaled
his guests with graphic descriptions of strip shows performed by female
inmates for male guards. Investigators at a CCA jail in New Mexico found
that guards had inflicted injuries on prisoners ranging from cuts and
scrapes to broken bones. Riots have erupted at various private facilities.
In one of the worst, guards at CCA's West Tennessee Detentional Center
fired pepper gas canisters into two dormitories to quell a riot after
prisoners shipped from North Carolina revolted over being sent far from
their families.

In addition
to the companies that directly manage America's prisons, many other firms
are getting a piece of the private prison action. American Express has
invested millions of dollars in private prison construction in Oklahoma
and General Electric has helped finance construction in Tennessee. Goldman
Sachs & Co., Merrill Lynch, Smith Barney, among other Wall Street
firms, have made huge sums by underwriting prison construction with the
sale of tax-exempt bonds, this now a thriving $2.3 billion industry.
Weapons manufacturers see both public and private prisons as a new outlet
for "defense" technology, such as electronic bracelets and stun guns.
Private transport companies have lucrative contracts to move prisoners
within and across state lines; health care companies supply jails with
doctors and nurses; food service firms provide prisoners with meals. High-tech
firms are also moving into the field; the Que-Tel Corp. hopes for vigorous
sales of its new system whereby prisoners are bar coded and guards carry
scanners to monitor their movements. Phone companies such as AT&T
chase after the enormously lucrative prison business.

About three-quarters
of new admissions to American jails and prisons are now African-American
and Hispanic men. This trend, combined with an increasingly privatized
and profitable prison system run largely by whites, makes for what Jerome
Miller, a former youth corrections officer in Pennsylvania and Massachusetts,
calls the emerging Gulag State. Miller predicts that the Gulag State will
be in place within 15 years. He expects three to five million people to
be behind bars, including an absolute majority of African-American men.
It's comparable, he says, to the post-Civil War period, when authorities
came to view the prison system as a cheaper, more efficient substitute
for slavery. Of the state's current approach to crime and law enforcement,
Miller says, "The race card has changed the whole playing field. Because
the prison system doesn't affect a significant percentage of young white
men we'll increasingly see prisoners treated as commodities. For now the
situation is a bit more benign than it was back in the nineteenth century
but I'm not sure it will stay that way for long."

Side
Bar

Private prison
companies have been predictably enthusiastic about the booming market for
convict labor. Between 1980 and 1994, the value of goods produced by prisoners
rose from $392 million to $1.31 billion. Prisoners now make articles such
as clothes, car parts, computer components, shoes, golf balls, soap, furniture
and mattresses, in addition to staffing jailhouse telemar-keting data entry
and print shop operations. Some states have even begun assigning prisoners
to institutions after matching up their job skills with a prison's labor
needs. Prisoners at state-run institutions generally receive the minimum
wage, though in some states, such as Colorado, wages fall to as low at $2
per hour (workers receive only about 20 per cent of that amount, with the
rest going to pay room and board, victims compensation programs and other
fees). As an added bonus, companies that employ prison labor have no need
to offer benefits, vacation days or sick time to employees and many states
offer such firms tax breaks and other advantages as well.

Lured by
such enticements, many big firms have moved eagerly into the prison-industrial
complex. Trans World Airlines pays prison workers $5 per hour to book
reservations by phone, less than a third of the rate it previously paid
to its own employees. The EAU succeeded in shutting down a program at
an Ohio prison where the Waste corporation was paying prisoners $2.05
per hour to assemble parts for Honda cars.

For businesses,
the deal is even sweeter at private prisons where pay rates can be as
low as 17 cents per hour for a six hour maximum day, which translates
into a monthly pay check of about $20. The maximum pay scale at a CCA
prison in Tennessee is 50 cents an hour for what are classified as "highly
skilled positions." Given such rates it's not surprising that a prisoner
there
complained about the relative generosity of publicly-run programs, saying,
"At federal prisons you can take home $1.25 per hour and work eight hours
a day, sometimes even double shifts. A two, three or four hundred dollars
a month check isnât unusual in the feds."

Thanks to
prison labor, America is again attracting the sorts of jobs that were
formerly available only to workers of the Third World. A US company operating
in Mexico's maquiladora zone shut down its data processing shop and moved
it to the San Quentin State Prison in California. A Texas factory booted
150 workers and set up shop at a privately-run prison in Lockhart, Texas,
where worker/inmates assemble circuit boards for companies including IBM
and Compaq. Oregon State Rep. Kevin Mannix has even encouraged Nike to
shift production from Indonesia to his home state, saying the shoemaker
should "take a look at transportation and labor costs. We could offer
competitive prison labor (here).

Strange
Bedfellows: CCA's Political Connections

by Alex
Friedmann

The following
article originally appeared in CounterPunch, a Washington, DC-based
political newsletter (CounterPunch, PO Box 18675, Washington, DC 20036.)

CCA's connection
with local politics began when the Nashville-based company was formed
during Governor Lamar Alexander's administration. When CCA made
a bid to operate Tennessee's entire prison system in 1985, the governor's
wife, Honey Alexander, was criticized for owning $5,000 of CCA stock.
She realized a substantial profit ($100,000) when she converted the stock
to a blind trust in order to avoid an apparent conflict of interest. CCA
chairman emeritus Thomas Beasley, who co-founded the company in 1983,
was previously a chairman of the Tennessee Republican Party. Among CCA's
board members is Clayton McWhorter, an unsuccessful Democratic candidate
for Tennessee governor in 1994.

In 1995,
Governor Sundquist endorsed a controversial arrangement whereby CCA could
contract with Hardeman County, TN, to construct and operate a 1,540-bed
"jail," funded with $47 million in municipal bonds guaranteed by the state,
to house state prisoners. This arrangement circumvented a TN state statute
that allows only one privately-managed state prison to operate in Tennessee
at a time. State Senator Robert Rochelle, who received at least $1,000
in campaign contributions from CCA board members, sponsored a bill to
permit privatization of any newly-built state prisons. He has sponsored
other legislation on behalf of CCA. Peaches Simkins, Governor Sundquist's
former Chief of Staff, reportedly owned CCA stock while she was advising
the governor on prison privatization. The Speaker of the House in Tennessee's
General Assembly, Jimmy Naifeh, is married to CCA political lobbyist Betty
Anderson. In terms of connections on a U.S. Congressional level, CCA employs
several former high-ranking members of the Federal Bureau of Prisons,
as well as Dr. Tyree Tanner, the brother of U.S. Representative
John S. Tanner.

Racial
discrimination in the US Gulag business

Reports
from Human Rights Watch (HRW)

Some states send
black men to prison at rates 27 to 57 times greater than whites (New York,
June 8, 2000) -- The U.S. war on drugs has been waged overwhelmingly against
black Americans, Human Rights Watch charged in a new report released today.
The report, "Punishment and Prejudice: Racial Disparities in the War on
Drugs," includes the first state-by-state analysis of the role of race and
drugs in prison admissions. All of the 37 states Human Rights Watch studied
send black drug offenders to prison at far higher rates than whites.

"These racial
disparities are a national scandal," said Ken Roth, Executive Director of
Human Rights Watch. "Black and white drug offenders get radically different
treatment in the American justice system. This is not only profoundly unfair
to blacks, it also corrodes the American ideal of equal justice for all."

The ten states
with the greatest racial disparities are: Illinois, Wisconsin, Minnesota,
Maine, Iowa, Maryland, Ohio, New Jersey, North Carolina, and West Virginia.
In these states, black men are sent to prison on drug charges at 27 to
57 times the rate of white men.

"Most drug
offenders are white. Five times as many whites use drugs as blacks," said
Jamie Fellner, Human Rights Watch associate counsel and author of the
report. "But blacks comprise the great majority of drug offenders sent
to prison. The solution to this racial inequity is not to incarcerate
more whites, but to reduce the use of prison for low-level drug offenders
and to increase the availability of substance abuse treatment."

Among the
report's key findings:

Nationwide,
blacks comprise 62 percent of drug offenders admitted to state prison.
In seven states, blacks constitute between 80 and 90 percent of all
people sent to prison on drug charges.

Nationwide,
black men are sent to state prison on drug charges at 13 times the
rate of white men.

Two
out of five blacks sent to prison are convicted of drug offenses,
compared to one in four whites.

Black
men are incarcerated at 9.6 times the rate of white men. In eleven
states, they are incarcerated at rates that are 12 to 26 times greater
than that of white men.

Nationwide,
one in every 20 black men over the age of 18 is in prison.

In five
states, between one in 13 and one in 14 black men is in prison.

The Human Rights
Watch document "Punishment and Prejudice" also accounts for how drug law
enforcement has fueled the exploding U.S. prison population. It should
be noted that: [1] during the 1990s, more than one hundred thousand people
were admitted to prison on drug charges every year; [2] over 1.5 million
prison admissions on drug charges have occurred since 1980; [3] The incarceration
of nonviolent drug offenders has propelled the nation's soaring incarceration
rate, the highest in the western world.

Human Rights
Watch calls for changes in drug control strategies to minimize their racially
disproportionate impact and to reduce the overincarceration of nonviolent
offenders. Among its recommendations, Human Rights Watch urges states
to: [1] repeal mandatory minimum sentencing laws for drug offenders; [2]
increase the availability of alternative sanctions; [3] increase the use
of drug courts; [4] increase the availability of substance abuse treatment;
and eliminate racial profiling.

In the past
decade, the U.S. Congress and many state legislatures have established
harsh criminal penalties for a wide range of drug offenses, often using
the vehicle of mandatory minimum prison sentences. As a consequence, drug
offenders in the United States face sentences that are uniquely severe
among constitutional democracies. Supporters insist that severe mandatory
sentences guarantee serious drug offenders are put behind bars, offer
prosecutors leverage for securing cooperation from drug traffickers, deter
prospective offenders, and enhance community safety and well-being. Opponents
point to data showing the laws have had little impact on the demand for
or the availability of drugs. Instead, they have resulted in the unnecessary
confinement of low-level nonviolent offenders (most of whom are poor African-Americans
and Hispanics), a staggering growth in prison populations, and a waste
of public resources. Judges decry the excessive and unfair sanctions that
mandatory sentencing laws can require in individual cases. Missing from
the debate over drug sentencing laws, however, has been a critique of
their human rights impact.

Sentences
for drug offenders in New York state are among the most punitive in the
country. A person convicted of a single sale of two ounces of cocaine
faces the same mandatory prison term as a murderer--fifteen years to life.
Long prison sentences may be proportionate for traffickers who run large
and violent drug distribution enterprises. But in New York, the vast majority
of
drug offenders sentenced to prison are nonviolent minor drug dealers or
persons only marginally involved in drug transactions--people who
make $20 sales on the streets, one-time couriers carrying drugs for a
small fee, addicts who sell to finance their own habits. For these people,
even a few years of imprisonment can be disproportionately severe punishment
that
violates the inherent dignity of persons, the right to be free of cruel
and degrading punishment, and the right to liberty. Such sentences contravene
the Universal Declaration of Human Rights, the International Covenant
on Civil and Political Rights, and the Convention Against Torture and
Other Cruel, Inhuman, or Degrading Treatment or Punishment.

Human Rights
Watch does not challenge the public's decision to use criminal sanctions
in its effort to curtail drug abuse and drug trafficking. But the use
of the criminal sentences is subject to important human rights constraints.
To be consistent with internationally recognized human rights standards,
criminal sanctions must be both humane and proportional to the gravity
of the offense.

Drug Control
Strategies Must Respect Human Rights - A Statement by Human Rights Watch
to the U.N. General Assembly
in a Special Session Devoted to the Fight Against Narcotic Drugs (June
1998)http://www.hrw.org/press98/june/drug-pol.htm